U.S. charges Florida pair with selling counterfeit computer chips from China to the U.S. Navy and military

Federal prosecutors in Washington unsealed charges Tuesday accusing a Florida pair of selling more than 59,000 counterfeit computer microchips from China to the U.S. Navy and other clients for military use aboard American warships, fighter planes, missile and antimissile systems.

Shannon L. Wren, 42, of Treasure Island, Fla., and an employee, Stephanie A. McCloskey, 38, of Clearwater Beach, were named in a 10-count indictment handed up last Wednesday by a federal grand jury in the U.S. District Court of the District of Columbia.

Wren, owner of VisionTech Components and related companies, and McCloskey, an administrator, were charged with conspiracy, trafficking in counterfeit goods and mail fraud.

The case marked the latest effort by U.S. authorities to stem the flow of fake electronics into the U.S. military supply chain, as warnings mount mthat fake chips could be defective or "electronic Trojan horses" that would allow hackers to disable them or track their use.

The U.S. military pays a premium for chips that can withstand extreme conditions such as desert heat, the cold of the deep sea or space or vibrations that accompany a missile launch. But the demand for chips and circuitboards in weapons and vehicles and communications systems has surged because of the wars in Afghanistan and Iraq, leaving the military vulnerable to fakes.

A string of recent government reports warn that computer chips marked with false brands or mislabeled as military-grade may include imperfections that could cripple or degrade weapons systems in combat or over time.

The number of counterfeit incidents discovered by the military and its suppliers more than doubled between 2005 to 2008, to more than 9,356 cases, the Commerce Department reported in January. Meanwhile, lawmakers and congressional investigators have called on the Pentagon and law-enforcement agencies to combat the problem more aggressively.

"Product counterfeiting, particularly of the sophisticated kind of equipment used by our armed forces, puts lives and property at risk," said U.S. Attorney Ronald C. Machen Jr. for the District of Columbia.

Wren, a former drag car racer who also ran a Tampa retail store popular among professional athletes, and his associate were arrested Tuesday on bench warrant. Telephone and e-mail messages left with them and co-workers at VisionTech Components in Clearwater, Fla., late Tuesday afternoon were not immediately returned.

According to the U.S. Justice Department, government agents executed two search warrants and 17 seizure warrants for luxury vehicles allegedly bought by the pair or unnamed conspirators with $16 million in counterfeit sales, including a Showhauler Motor home, Ferrari Spider, Bentley Arnage and Mercedes Benz motorcycles.

The indictment said defective parts were discovered in chips intended to be used by Navy ships, by a Raytheon classified missile program, by an antiballistic missile antenna system, as well as a "life-critical" control system for a high-speed trains.

The indictment does not suggest that any counterfeit chips that prompted complaints actually made their way into weapons systems.

Some of the chips sold by the defendants were allegedly resold by Mustafa Aljaff and Neil Felahy, two brothers-in-law from Newport Beach, Calif., who recently admitted to importing more than 13,000 counterfeit chips from China. They entered into a plea deal and are cooperating with authorities.